Or, it might involve a simple redesign, at a cost of about $20 in extra parts, aimed at turning the classic electric resistance hot water tank into a “breakthrough variable-capacity grid-interactive water heating technology.”

That’s how Sequentric Energy Systems describes its latest contribution to the field of water heater-as-smart grid resource. Last week, the Atlanta-based startup was awarded a U.S. patent for its technology. At this week’s ACEEE Hot Water Forum — an entire conference dedicated to efficient ways to heat water — Sequentric announced its first manufacturing partner, Massachusetts-based Vaughn Thermal Corp., which plans to start making them for utility buyers.

So, what’s the big breakthrough? According to Sequentric CEO Daniel Flohr, it involves little more than taking advantage of the way that hot water rises and cold water sinks in a heater tank. Most water heaters heat the entire tank of water, leaving little wiggle room in how often utilities can turn them on or off without affecting temperature, angering customers, and making them a no-go for mass deployment.

But adding an extra heating element at the bottom of the tank, where the cold water sits, allows utilities the ability to turn it on and off at will, while leaving the hot water at the top of the tank at a stable temperature, he said.

That solves four key challenges, he said — “How do we give the utility company the timing, how do we keep it safe, how do we keep water hot, and how do we keep it simple?”

These are challenges that have limited today’s water heater demand response programs. Traditional water heaters have some pretty strict limits on how often they can be turned off, and for how long, before the water gets cold enough to be noticed by homeowners. Likewise, programs that use water heaters to absorb excess power — for example, to make use of wind power that would otherwise be curtailed for lack of demand — can only crank up the heat so much, before it starts to get dangerously hot, threatening homeowner safety and the integrity of the water heater itself.

This new design, by contrast, allows utilities to “extend the capacity — and take over 100 percent of the timing,” Flohr said. Here’s a chart illustrating how a utility using one of Sequentric’s water heaters is able to use that lower heating element in ways that drive significant ups and downs in the lower, colder portion of the tank, while keeping water temperature at the top of the tank stable:

From Real-Time Grid Support to Long-Range Wind Energy Storage

What can be done with a utility-controlled water heater with this kind of range and flexibility? A new pilot between Battelle, the Columbus, Ohio-based nonprofit that manages DOE labs including Pacific Northwest National Laboratory (PNNL), and mid-Atlantic grid operator PJM is testing out one possibility — turning water heaters spread across several commercial campuses into second-by-second frequency regulation responsive loads.

“Part of the challenge for frequency regulation is verifying to PJM that you did what they asked you to do,” Jason Black, energy and environment research leader at Battelle, said. “Especially when you have 1,000 water heaters out there, and they say, give me 30 kilowatts,” which equates to about 5 or 6 water heaters.

“We have some proprietary methodology, that we’re patenting, on how we can very transparently show PJM what we’re doing by declaring a schedule for each of the individual water heaters,” he said. While Battelle is retrofitting existing water heaters with Sequentric’s load controller right now, it has also tested the company’s new design, which could “allow for additional, finer grained control and provide additional storage capability compared to a traditional water heater,” he said.

That storage capability is critical to balancing 24-hour fluctuations in grid supply and demand, Flohr noted. For example, water heaters could be controlled to slowly allow the water at the bottom of the tanks to cool, so that, “At midnight, we can have relatively small capacity,” just enough to serve a household’s hot water needs. Then, through the course of the night, “when the wind is cranking, through seven in the morning, charge it up,” or heat all the water in the tank.

Then, when morning electricity peak demand arrives, the water heater can be turned off almost completely, to draw off that stored hot water capacity. From that point on, “over the course of the day, we’re still putting energy in, but at a rate less than what is coming out,” he said.

That excess capacity could also be made available to absorb power that comes when wind power spikes, or substations trip offline, he said. “The code name we have with Battelle is the “Spinal Tap” mode — it goes to 11,” he said. “Being able to selectively overcharge, keeping something in reserve, just in case – but still safely, so the homeowner doesn’t get burned, so the tank’s lifespan isn’t hurt.”

These kinds of deep discharge and recharge cycles can shorten the life of batteries asked to do similar tasks, he said. But even more importantly, unlike batteries, there are 50 million or so electric water heaters in the United States already in place, ready to serve wind power storage and fast-response needs.

Market Potential, Versus Alternatives

How could water heaters with this new design get into the homes and connected to the utilities that need them? Steven Koep, utility sales manager at Vaughn, noted that water heaters are replaced every 10 to 15 years or so, far more rapidly than most other household appliances, which could make them one of the earliest “smart appliances” to see widespread market adoption.

“Retrofitting grid-interactive controls has been done on small scales for demonstration projects, but I think it’s a less viable option than being able to take advantage of the 8 to 10 percent average turnover of electric water heaters every year,” he said. “And the incremental cost of adding the control to the unit at the Vaughn manufacturing plant is probably a tenth of the cost” of retrofits, he added.

Despite its new patent, Sequentric isn’t in the water heater business, Flohr noted. Rather, it makes sensors and controls for end loads, as well as the software to manage the network that connects them to utility or grid operator systems. “We give them the real-time telemetry, and they decide how to dispatch the network, and we take care of the housekeeping — and it operates in real time,” he said.

The company is involved in about 26 projects, with about 2,100 devices connected, he said. Some two-thirds of them are water heaters, where Sequentric’s sensor and control array provides voltages, temperature, current transformer readings, state of relay information, leak detection, and communications links to operators, usually via cellular or broadband Internet.

In Canada’s PowerShift Atlantic project, Sequentric has retrofitted a number of water heaters that utilities lease to customers. Utility water heater lease programs are a natural target for Sequentric’s new water heater design, Flohr said. In the U.S. Midwest and Ontario, utility Direct Energy has a fleet of about 1.25 million leased water heaters, and similar programs are sponsored by Tennessee Valley Authority and others.

New Brunswick Power, one of the PowerShift program’s participants, replaces about 10,000 of these leased water heaters per year, and charges customers $6 a month on their electric bill for the service, he said. When those water heaters break down or start to leak, the utility has an incentive to replace them quickly, he added.

Beyond direct leasing programs, there’s a world of water heaters that could eventually be turned over into more responsive utility assets. Thirty-five states have utilities running water heater load control programs, which turn them on and off via remote control to help shave loads during grid peaks. In the United States, rural co-ops are big customers — the National Rural Electric Cooperative Association (NRECA) counts about 220 member utilities with water heater demand response programs, and another 100 planning them.

One possible hurdle for the expansion of this market is the question of whether electric water heating should be expanded, or instead replaced with natural gas fueled water heaters, heat pump water heaters, solar hot water systems or other higher-efficiency options. Earlier this year, the Department of Energy proposed water heater efficiency standards for 2015 and onward that could bar many electric water heaters from the market.

Backers of demand response-capable water heaters, including NRECA PJM, the American Public Power Association, the Edison Electric Institute and smart water heater maker Steffes Corporation, have asked DOE to reconsider those rules, which could have broader impacts on water heater manufacturers across the spectrum.

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